IURD

Monthly Archives: 10/2014

Modified from the City of Santa Cruz’s ADU Manual, available at www.cityofsantacruz.com

Around the globe, many cities are experiencing a housing affordability crisis. There are few places this crisis is more pronounced than San Francisco and Los Angeles. California’s strict land use regulations hinder us from producing enough housing, particularly infill development, or new buildings on vacant or underutilized land in the urban core.

The crisis will only get worse as we plan for a more sustainable region. With two million new residents expected in the Bay Area by 2040, the region is proposing to channel 80% of its future growth into 5% of regional land area. To help, cities will get transportation funding and relief from environmental regulation. But that may not be enough to counteract the challenge of finding appropriate sites or even just paying for high-rise residential buildings outside of the region’s major downtowns (San Francisco and San Jose). Rising land prices in the core will also mean higher housing costs. At the same time, the vast majority of new jobs expected in the Bay Area are expected to be low-wage, exacerbating the need for affordable housing.

What if the solution is actually in our own backyards? My study with University of Texas-Austin Professor Jake Wegmann, published recently in the Journal of Urbanism, shows that based on the availability of underutilized or vacant land, about half of our infill development in built-up areas like San Francisco’s East Bay should occur in the form of accessory dwelling units, or self-contained, smaller living units, attached or detached from the main home. With relatively low costs (as low as $100,000) and short build time (less than six months), backyard cottages can increase density more efficiently than multifamily projects. They rent for much less, often providing affordable units within affluent neighborhoods and diversifying the housing stock. We calculate that a backyard cottage strategy could yield as many as six times as many affordable units as conventional infill.

The question then becomes, what is hindering homeowners from building more cottages? Even in Berkeley, a city that welcomes accessory units, the number of permit applications for home additions still dwarves that for cottages. We argue that the market is blocked largely because of restrictive zoning regulations, particularly parking requirements. One solution has appeared in the form of intermediaries that help homeowners navigate city regulations and manage construction. But the market for these intermediaries is mostly a niche of wealthy elderly homeowners seeking to age in place alongside younger generations.

To address the affordable housing crisis while making our regions more sustainable, a mass market for small-scale infill must emerge. But to create such a market requires a fundamental shift in the conversation. Just as in the debate over climate change, we can argue endlessly on the merits and the means, but in the end, the game-changer will be the costs of inaction – a deepening of the already devastating housing crisis.

Banks currently don’t allow current or prospective homeowners to use income from accessory units to qualify for mortgages. That means that only the homeowners with substantial equity in their homes who can finance the construction of accessory units. Developing a mass market means helping low- and moderate-income homeowners to build – and purchase – homes with accessory units as well. As Wegmann has written, state and national housing finance agencies could adapt their existing programs to provide new mortgage products for new permitted spaces. Eligibility for the loans could be predicated on the home city easing zoning regulations for accessory units.

It took a revolution in mortgage finance to spur the suburbanization of America. It will take a new revolution to make affordable infill possible.

In the history of the Institute for Urban and Regional Development, which celebrates its 52nd birthday this year, the issues with which we are most deeply engaged have never been in such national and international focus. The conversation around the planning, design and development of cities and regions advances daily, and new ideas about resiliency, equity, and innovation are emerging from every corner of the globe.

Here at the IURD, we have a team of world class faculty researchers immersed in these issues. We are producing first-rate research, adding to this national and international dialogue on issues from wealth inequality to data analytics, transportation to youth engagement, health disparities to local policy, all through the stimulating, and ever critical, lens of urban and regional development.

We’ve turned to the blogosphere to join the virtual conversations already happening around these issues, and provide a portal into our own contributions. As one of the oldest urban think tanks in academia in the country, our library of research and resources is extensive and rich. This blog will be a gateway into what we’ve already learned, and an opportunity to learn about the newest research and ideas as they emerge. As a platform for engagement, this space is above all a conversation starter. We encourage you to get involved, share your thoughts, and connect with us.

To start, we invite you to check out our centers webpages, follow us on twitter (@IURDBerkeley) or send us an email: iurd@berkeley.edu. We look forward to hearing from you!